Kristian Electric had been doing business in Saskatchewan for decades.
Yet the Calgary-headquartered company that manufactures and services overhead cranes and hoists had never had a bricks-and-mortar presence in the province.
That changed last year, however, when it set up shop in Saskatoon.
“We have been dealing in Saskatchewan out of Alberta for about 40 years, and we just saw an opportunity where we could open up an overhead crane and welder machinery repair shop,” says Kristian Electric’s president Kevin Gjertsen.
The company had long seen the upside to doing business in the province, so when the opportunity arose to purchase a Saskatchewan-based company through which it had contracted work in the past, Gjertsen says they felt the time was right to make a big investment.
“Of course we have to build up the company to let everybody know we’re here, which takes time,” he says. “But the government here is very helpful, letting us know of potential customers and about market conditions. It’s unbelievable how good they have been.”
Similar narratives have played out countless times over the past decade: companies giving rave reviews about Saskatchewan’s business-friendly climate.
From mining to oil and gas multinationals, firms have been expanding operations and, in some cases, even relocating headquarters.
Most of the impetus comes from Saskatchewan’s strong, diversified economy, with $50 billion in mining capital projects and more than $40 billion in energy investment expected in the next several years. Not to mention record-breaking agricultural production that hit nearly $14 billion in export sales in 2014.
“We have made a big push in the past several years to reduce barriers to investment, making a commitment to stable, competitive royalties and regulations and reducing taxes,” says Bill Boyd, Saskatchewan Minister of the Economy.
This includes two new tax incentives introduced this year targeted to manufacturers and processors: a tax credit of $10,000 per new job for companies that relocate or expand their headquarters in Saskatchewan; and a tax credit of $3,000 per new job for exporting companies that expand their operations in the province.
One of the highest performing sectors in the past decade has been energy.
“We’re now the fifth-largest producer of oil in North America,” says Ed Dancsok, assistant deputy minister for petroleum and natural gas in the Saskatchewan Ministry of the Economy.
There are a lot of good things going for Saskatchewan … plenty of room to grow and lots of opportunity in the long run. — Kevin Gjertsen
The province offers ample deposits of tight oil, shallower and more accessible than most in North America, combined with a stable royalty and regulatory environment and a robust incentive regime again to help boost development.
One well established program helps reduce the cost of horizontal drilling exploration by substantially decreasing royalties until a producer has recouped its initial investment cost.
“That incentive provides a maximum royalty rate of 2.5 per cent for the first 35,000 barrels for horizontal wells, for example,” Dancsok says. “What it’s meant to do is allow for the payback of those wells in a timely way, reducing the risk to the industry for drilling wells in Saskatchewan.”
Another program encourages research and development in enhanced oil recovery, reducing royalty costs to one per cent until a producer’s initial investment in a project has been recovered.
One success story of this program is the Weyburn-Midale Carbon Dioxide Project that involves carbon capture technology, Dancsok says.
“We’re getting more oil out of the ground than ever thought possible, plus we are storing carbon dioxide underground forever, so it’s a win-win.”
Beyond creating a business-friendly environment, the provincial government encourages economic development by providing wide-ranging support to new and existing businesses.
“We try to help the decision makers to facilitate projects,” Dancsok says. “We work collaboratively to help companies.”
The result is firms have to cut through less red tape while being able to find the resources and support necessary to realize profitability of new operations more quickly than they would otherwise.
Of course, this isn’t news to Gjertsen at Kristian Electric who says the province reminds him a lot of Alberta in the 1970s when its oil industry was hitting its stride.
“There are a lot of good things going for Saskatchewan,” he says. “There is plenty of room to grow and lots of opportunity in the long run.”
About this content: This story was produced by Postmedia Works on behalf of Saskatchewan’s Ministry of the Economy for commercial purposes. Postmedia’s editorial departments had no involvement in the creation of this content.